Corbett's conviction

Wednesday

Jul 2, 2014 at 12:01 AMJul 2, 2014 at 6:00 AM

State lawmakers this week managed to do something they were terrible at during the Rendell administration: pass a budget on time. Barely. They beat the midnight deadline by a mere three hours — only to have Gov. Corbett fail to endorse their last-minute dickering and bickering by refusing to sign it.

Good!

The governor told lawmakers several weeks ago that he would not a sign a budget if they had not solved an issue begging for their attention: pension reform. As problematic as not having a budget is, it pales in comparison to the pension crisis. And by crisis we mean a huge mess that threatens to bankrupt the state as well as just about every school district in the commonwealth that likewise has to help patch up gaping holes in the state’s pension funds. How big are those holes?

Combined, the state’s two pension funds — one for state workers and the other for school employees — are $50 billion in the red. That’s what they don’t have that they owe retirees and future retirees. And that number is growing. What’s not growing is Pennsylvania’s financial standing, as the pensions’ mammoth unfunded liability takes a toll on the state’s credit rating, making it more expensive for state government to borrow money. And you know what that added cost means: higher state taxes and fewer state services. Ditto the the impact on school districts.

If you’re not aware by now, pretty much every school district in the state is looking at steeply spiking pension obligations for years to come. And that means school boards everywhere will be raising taxes and cutting educational programs so they can meet their obligations to retirees and future retires whose generous pensions are based on an archaic model the private sector ditched decades ago because it’s unsustainable.

The reform plan backed by Corbett would scrap the state’s traditional pensions for new employees and replace them with the 401(k) retirement plans now commonly offered by private employers. That option is no panacea, but at least it would slow the bleeding by saving some $10 billion over the next 30 years.

Instead, lawmakers threw the governor a bone by offering to shift themselves, judges, the governor and four other elected executive branch officials into a 401(k)-style system. That would save $690 million over 38 years, not nearly enough. That’s not to say lawmakers shouldn’t lead by example. They should. But they also should lead by doing the right thing. And in this case, the hard thing.

Effective pension reform will make a lot of people unhappy. Lawmakers might even end up in court. But the alternative to bold leadership is the sorry excuse for leadership we’ve been witnessing for years on an issue that threatens to gut education, eviscerate services people rely on and hurt taxpayers. Lawmakers, who are partially to blame for this mess, need to do as the governor asked and get to work. Failure is not an option.

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